Whereas the governor said voters' decision to raise taxes last year helped state government escape the deficits of the previous decade he also insisted this is not yet the time to pass major spending hikes.

"We've climbed out of the hole with a Prop. 30 tax. That's good, but this is not the time to break out the champagne," Brown said during his Tuesday morning news conference on the budget.

Southern California lawmakers on both sides of the aisle reacted to Brown's proposal with a measure of approval although there is considerable room for debate as the Legislature prepares for its part in shaping the budget. The governor's budget proposes significant changes to education and health care policies, and there are also some questions as to whether state revenues will be better than what the administration is predicting.

"We're certainly going to evaluate the entirety of the proposal and, as usual, make substantive changes," said Assemblyman Bob Blumenfield, D-Van Nuys.

Blumenfield is chairman of the Assembly Budget Committee. Among his chief questions are whether revenue projections from the state's nonpartisan legislative analyst, expected on Friday, will match those from the Governor's Office. That could have a major influence on whether lawmakers will press for funding requests that have been left out of Brown's proposals.

"All of us who lived through the painful cuts of the last years, we want to make sure we won't make financial expectations that can't be met over the long term," Blumenfield said.

On the Republican side, Sen. Bill Emmerson, vice-chair of the upper house's budget committee, was generally favorable to Brown's revised proposal. He emphasized, however, that he and other Republicans want the Legislature to allow voters to have their say next year on a ballot measure to establish a "rainy day fund" for Sacramento.

In the meantime, Emmerson, R-Redlands, anticipates considerable talk of new spending and tax proposals in the Legislature.

"There's a lot of pent-up spending anxieties going on here in town," he said.

The governor's revised budget proposal would allocate $1 billion more than was proposed in January to California schools to enact new "common core" standards. Brown's budget also calls almost a quarter-billion dollars more as part of his education-funding overhaul.

The added K-12 funding is made possible by a cash windfall of almost $4.6 billion that the state has enjoyed in the first 10 months of this fiscal year, mostly due to better-than-expected personal income tax revenue. Proposition 98, an education funding measure passed by voters in 1988, requires that a significant chunk of that money go to schools.

But the May revision also includes a downward shift in the short-term economic outlook because the federal government did not extend the partial payroll-tax "holiday" that was in place for 2011 and 2012. That means forecasted personal income growth in 2013 has been almost halved, from 4.3 percent to 2.2 percent. That fact, coupled with the federal budget sequester, calls for renewed fiscal caution in California, the budget proposal says.

So while the picture is a bit brighter for schools, Brown's proposed general-fund spending is now $96.4 billion for the budget year starting July 1 - that's $1.3 billion less than he proposed in January.

"For the first time in more than a decade we've got a balanced budget and it's solid," Brown said at Tuesday's news conference, adding: "We have money to invest in education because of Proposition 30," the sales tax and income-tax hike for the wealthy that voters approved in November.

"There are risks," Brown cautioned. "We have to be planning for the next 14 months, and the next 14 months have not yet happened. ... This is a prudent budget."

Brown's revised budget still includes his plan from January to revamp education funding, directing more money to low-income schools and giving districts more control over how to spend the state's money.

When fully implemented, it's projected that the new local-control funding formula will spend 80 cents of every dollar on base grants for every district; 16 cents in supplemental funding for every English learner, student from a low-income family, or foster child in a district; and four cents for those districts with a particularly high concentration of these students.

The schools funding proposal is sure to be among the most-heavily debated components of the state budget, but has the approval of outgoing Los Angeles Mayor Antonio Villaraigosa.

"I applaud the proposed increase in education funding and strongly support his ongoing effort to provide school districts with local control in spending decisions," he said. "I have long said increased autonomy must go hand-in-hand with increased accountability, and I am pleased to see stronger accountability measures have been incorporated into his proposal."

Medi-Cal's costs are $467 million higher than anticipated in January, mostly due to the federal government and courts either rejecting or delaying approval of earlier legislative actions.

Yet Brown's proposal may lead to conflict between Sacramento and county governments. As the state implements the federal Affordable Care Act, its Medi-Cal expenses are also expected to rise. As that happens, the governor's budget proposal would shift funding from county-administered to state health programs.

The governor's proposal would immediately strip counties of $300 million in funding, plus another $900 million and $1.3 billion in the years after that.

The governor had claimed counties could spare the money since the state will take on some of their expenses while implementing the Affordable Care Act. Brown reasoned the $300 million - about $100 million of which would come from Los Angeles County alone - should instead go toward CalWORKS, the state welfare program, and CalFresh, formerly known as food stamps.

But Los Angeles County's Chief Executive Officer William Fujioka said he was "adamantly opposed" to this formula, which he described as "fundamentally flawed."

"What (the state) has done is they've overly inflated the new revenue we're going to get, and they've understated our costs," he said.

Fujioka pointed out the federal government will pay for 100 percent of the state's Medi-Cal expansion for three years, after which the rate would decrease but still remain above 90 percent.

The new budget plan proposes $48 million more in CalWORKs welfare-to-work funding for job training and subsidized job opportunities, and $72 million more for county probation departments that are grappling with their added workloads under the state's prison realignment plan.

But although plagued by downsized staffs, service reductions and darkened courtrooms because of bone-deep budget cuts over recent years, "the judiciary is getting the same amount of money they were given the year before," Brown said.

San Bernardino County Presiding Judge Marsha G. Slough responded that courts are reeling from budget cuts and need at least some measure of restoration.

Funding has not been level to the courts, Slough said Tuesday following Brown's announcement.

"We do not have fat to cut, we are cutting to the bone," she said. "I was hoping there would have been some slight adjustment in funding to the courts. Even slight adjustment would have helped."

Environmentalists expressed dismay that Brown's revised budget plan shifts half a billion dollars of the funds generated by new cap-and-trade fees as a one-year loan to the state Finance Department.

"This means the governor will be delaying opportunities to use those funds to actually get critical reductions in global warming pollution at the time when all science shows that we must reduce those emissions as much and as quickly as possible," Kathryn Phillips, director of the Sierra Club California, said in a statement.

Brown in January unveiled the first good-news state budget California has seen in years, which he said would boost investment in education, implement health care reform and maintain fiscal stability while projecting surpluses for years to come.

Assembly Democrats last week rolled out their "Blueprint for a Responsible Budget," calling for "fiscal responsibility, a stronger middle class and less government red tape." Their plan includes putting a rainy-day fund measure on the 2014 ballot, to replace one that Democrats accepted in 2010 but don't like.